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TopBuild Reports First Quarter 2025 Results; Confirms Full Year Outlook

1. TopBuild's Q1 sales fell 3.6% to $1.23 billion. 2. Installation sales dropped 6.7%, but Specialty Distribution grew 2.6%. 3. Adjusted EBITDA margin improved to 19.0% despite lower revenue. 4. Share repurchase program returned $215.6 million to shareholders. 5. Management remains optimistic despite current market uncertainties.

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FAQ

Why Neutral?

Sales decline and lower profits may weigh on stock; however, Specialty Distribution growth is positive.

How important is it?

Despite sales decline, steady EBITDA margins and share repurchase hold strategic importance.

Why Short Term?

Immediate impact likely due to reported results, but long-term optimism may stabilize stock.

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DHILENNVR
First quarter sales declined 3.6% to $1.23 billion Installation sales declined 6.7%, offset in part by Specialty Distribution growth of 2.6% Delivered adjusted gross margin of 29.6% and adjusted EBITDA margin of 19.0% DAYTONA BEACH, Fla., May 06, 2025 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD) a leading installer and specialty distributor of insulation and building material products to the construction industry in the United States and Canada today reported results for the first quarter ended March 31, 2025. “Our first quarter results were in line with our expectations,” said Robert Buck, President and CEO of TopBuild. “While total sales declined 3.6%, we are encouraged by Specialty Distribution growth of 2.6% as commercial and industrial projects have moved forward and our bidding activity and backlog are solid. Installation segment sales declined 6.7%, a reflection of the slow start to the year in new residential construction. Our profitability continues to be healthy, as we delivered first quarter adjusted EBITDA margin of 19.0%. “While there is uncertainty in the near-term economic environment, we are confident in our ability to adapt our business and outperform in a changing environment. We are taking steps to align our cost structure with the current demand landscape, while we continue to make targeted investments across our business, drive operational improvements and work together to turn challenges into opportunities. We are optimistic around the mid-term and long-term fundamentals for TopBuild, as underlying demand for housing in the United States is strong, and we see positive trends in the commercial and industrial end markets. “Acquisitions continue to be our number one priority for our free cash flow, and we are disciplined as we evaluate M&A opportunities and deploy capital to generate strong returns. In the first quarter, we returned $215.6 million in capital to shareholders through our share repurchase program,” concluded Mr. Buck. Financial Highlights(comparisons are to the quarter ended March 31, 2024) Three Months Ended March 31, 2025      Reported Adjusted($ in thousands) 2025  2024   2025  2024 Sales$1,233,278 $1,278,717  $1,233,278 $1,278,717 Gross Profit$351,473 $387,150  $364,976 $387,150 Gross Margin 28.5%  30.3%   29.6%  30.3% SG&A$173,984 $172,642  $170,829 $172,716 SG&A as % of Sales 14.1%  13.5%   13.9%  13.5% Operating Profit$177,489 $214,508  $194,147 $214,434 Operating Margin 14.4%  16.8%   15.7%  16.8% Net Income$123,385 $152,381  $135,147 $153,122 Net Income per diluted share$4.23 $4.79  $4.63 $4.81 EBITDA   $234,759 $253,818 EBITDA Margin    19.0%  19.8%        Sales Drivers               Three Months Ended March 31, 2025($ in millions) Installation Specialty Distribution TopBuild, net of eliminationsSales $746  $560  $1,233 Sales Drivers      Volume  (9.6%)   (2.2%)   (7.4%) Price  1.1%   1.4%   1.2% M&A  1.8%   3.4%   2.6% Total Sales Change  (6.7%)   2.6%   (3.6%)         Segment Profitability      Three Months Ended March 31, 2025($ in thousands)InstallationSpecialty DistributionOperating Profit$129,616$69,059Operating Margin17.4%12.3%Adj. Operating Profit$138,040$75,964Adj. Operating Margin18.5%13.6%Adj. EBITDA$157,556$91,366Adj. EBITDA Margin21.1%16.3%    Capital Allocation 2025 AcquisitionsIn the first quarter, TopBuild announced the acquisition of Seal-Rite Insulation, based in Omaha, Neb., a fiberglass and spray foam insulation installer for the residential and commercial end markets in Omaha and Lincoln for over 25 years. The business generates approximately $15 million in annual revenue and the transaction was completed in April. Share RepurchasesDuring the first quarter, TopBuild repurchased 693,881 shares totaling $215.6 million. Availability for share repurchases at the end of the quarter totaled $972.4 million. 2025 Outlook1TopBuild confirmed its full year outlook issued in February, noting that the guidance does not contemplate transactions that it expects to complete during the year. ($ in millions)  2025 OutlookLowHighSales$5,050$5,350Adjusted EBITDA$925$1,075 1 This outlook reflects management’s current view of present and future market conditions and is based on assumptions such as housing starts, general and administrative expenses, and interest rates. These targets do not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. A reconciliation of non-GAAP targets to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore cannot be reasonably predicted. The effect of these excluded items may be significant. Factors that could cause actual long-term results to differ materially from TopBuild’s current expectations are discussed below and detailed in the Company’s most recent Annual Report on Form 10-K and subsequent SEC reports. Sustainability Report The Company also announced that it published its 2024 Sustainability Report, which is available by visiting the Sustainability section of the TopBuild website. Conference Call A conference call to discuss the first quarter 2025 financial results is scheduled for today, Tuesday, May 6th, at 9:00 a.m. Eastern Time. The call can be accessed by dialing (877) 407-9037. A simultaneous webcast of the call, along with management’s formal remarks and a presentation, will be available on the Company’s website at www.topbuild.com shortly before the call begins. About TopBuild TopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada. We provide insulation installation services nationwide through our Installation segment which has more than 200 branches located across the United States. We distribute building and mechanical insulation, insulation accessories and other building product materials for the residential, commercial, and industrial end markets through our Specialty Distribution business. Our Specialty Distribution network encompasses more than 150 branches across the United States and Canada. To learn more about TopBuild please visit our website at www.topbuild.com. Use of Non-GAAP Financial Measures Adjusted EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the “adjusted” financial measures presented above, and figures presented on a “same branch basis” are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. We define same branch sales as sales from branches in operation for at least 12 full calendar months. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP. Additional information may be found in the Company’s filings with the Securities and Exchange Commission which are available on TopBuild’s website under “SEC Filings” at www.topbuild.com. Safe Harbor Statement This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, and our plan to repurchase our common stock under stock repurchase transactions. These forward-looking statements can be identified by words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” “may,” “project,” “estimate” or “intend,” the negative of these terms, and similar references to future periods.  These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. Our forward-looking statements contained herein speak only as of the date of this press release. Factors or events that we cannot predict, including those described in the risk factors contained in our filings with the Securities and Exchange Commission, may cause our actual results to differ from those expressed in forward-looking statements. Although TopBuild believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law. (tables follow)        TopBuild Corp.Condensed Consolidated Statements of Operations (Unaudited)(in thousands, except share and per common share amounts)         Three Months Ended March 31,   2025  2024 Net sales $1,233,278  $1,278,717 Cost of sales  881,805   891,567 Gross profit  351,473   387,150        Selling, general, and administrative expense  173,984   172,642 Operating profit  177,489   214,508        Other income (expense), net:      Interest expense  (16,602)  (18,795)Other, net  5,086   11,282 Other expense, net  (11,516)  (7,513)Income before income taxes  165,973   206,995        Income tax expense  (42,588)  (54,614)Net income $123,385  $152,381        Net income per common share:      Basic $4.25  $4.82 Diluted $4.23  $4.79        Weighted average shares outstanding:      Basic  29,028,234   31,641,454 Diluted  29,174,892   31,843,818         TopBuild Corp.Condensed Consolidated Statements of Comprehensive Income (Unaudited)(in thousands)          Three Months Ended March 31,   2025 2024 Net income $123,385  $152,381 Other comprehensive income (loss):       Foreign currency translation adjustment  229   (4,092)Comprehensive income $123,614  $148,289          TopBuild Corp. Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) (dollars in thousands)   As of   March 31, 2025 December 31, 2024 ASSETS       Current assets:       Cash and cash equivalents $308,811 $400,318 Receivables, net of an allowance for credit losses of $21,257 at March 31, 2025, and $18,541 at December 31, 2024  748,726  751,612 Inventories  406,057  406,662 Prepaid expenses and other current assets  30,723  40,382 Total current assets  1,494,317  1,598,974         Right of use assets  178,948  189,146 Property and equipment, net  259,691  266,992 Goodwill  2,113,416  2,112,259 Other intangible assets, net  539,582  557,689 Other assets  10,342  10,366 Total assets $4,596,296 $4,735,426         LIABILITIES       Current liabilities:       Accounts payable $422,786 $456,446 Current portion of long-term debt  52,500  48,750 Accrued liabilities  193,599  191,786 Short-term operating lease liabilities  68,257  68,713 Short-term finance lease liabilities  1,365  1,487 Total current liabilities  738,507  767,182         Long-term debt  1,312,879  1,327,159 Deferred tax liabilities, net  238,248  240,343 Long-term portion of insurance reserves  57,728  57,700 Long-term operating lease liabilities  129,243  129,360 Long-term finance lease liabilities  2,312  2,618 Other liabilities  1,355  1,446 Total liabilities  2,480,272  2,525,808         EQUITY  2,116,024  2,209,618 Total liabilities and equity $4,596,296 $4,735,426           As of March 31,    2025 2024 Other Financial Data       Receivables, net plus inventories less accounts payable $731,997 $736,414 Net sales, acquisition adjusted † $5,329,105 $5,272,731 Receivables, net plus inventories less accounts payable as a percent of sales (TTM) †  13.7%14.0%        † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches        TopBuild Corp.      Condensed Consolidated Statement of Cash Flows (Unaudited)      (in thousands)               Three Months Ended March 31,   2025  2024 Cash Flows Provided by (Used in) Operating Activities:              Net income $123,385  $152,381 Adjustments to reconcile net income to net cash provided by operating activities:      Depreciation and amortization  35,791   34,257 Share-based compensation  5,042   5,127 Loss (gain) on sale of assets  829   (561)Amortization of debt issuance costs  720   720 Provision for bad debt expense  3,666   4,464 Provision for inventory obsolescence  2,820   2,902 Impairment losses  9,868   — Deferred income taxes, net  (1,822)  (240)Change in certain assets and liabilities, net of effects of businesses acquired:      Receivables, net  (1,118)  (28,486)Inventories  (2,215)  (12,056)Prepaid expenses and other current assets  9,646   7,541 Accounts payable  (32,342)  (2,659)Accrued liabilities  (1,050)  16,170 Other, net  (631)  (783)Net cash provided by operating activities  152,589   178,777        Cash Flows Provided by (Used in) Investing Activities:      Purchases of property and equipment  (13,395)  (19,881)Acquisition of businesses, net of cash acquired  294   (22,240)Proceeds from sale of assets  248   1,608 Net cash used in investing activities  (12,853)  (40,513)       Cash Flows Provided by (Used in) Financing Activities:      Repayment of long-term debt  (11,250)  (12,059)Taxes withheld and paid on employees' equity awards  (4,466)  (6,059)Exercise of stock options  —   1,020 Repurchase of shares of common stock  (215,628)  — Net cash used in financing activities  (231,344)  (17,098)Impact of exchange rate changes on cash  101   (922)Net (decrease) increase in cash and cash equivalents  (91,507)  120,244 Cash and cash equivalents - Beginning of period  400,318   848,565 Cash and cash equivalents - End of period $308,811  $968,809        Supplemental disclosure of noncash activities:      Leased assets obtained in exchange for new operating lease liabilities $17,547  $13,737 Accruals for property and equipment  444   307 Excise taxes capitalized to treasury stock  2,156   —         TopBuild Corp.Segment Data (Unaudited)(dollars in thousands)             Three Months Ended March 31,        2025  2024  Change  Installation          Sales $745,533 $798,743   (6.7)%           Operating profit, as reported $129,616 $156,757     Operating margin, as reported  17.4% 19.6 %              Rationalization charges  8,281  —     Acquisition related costs  143  45     Operating profit, as adjusted $138,040 $156,802     Operating margin, as adjusted  18.5% 19.6 %              Share-based compensation  349  330     Depreciation and amortization  19,167  18,267     EBITDA, as adjusted $157,556 $175,399   (10.2)%EBITDA margin, as adjusted  21.1% 22.0 %              Specialty Distribution          Sales $559,804 $545,794   2.6 %           Operating profit, as reported $69,059 $77,579     Operating margin, as reported  12.3% 14.2 %              Rationalization charges  6,868  (750)    Acquisition related costs  37  —     Operating profit, as adjusted $75,964 $76,829     Operating margin, as adjusted  13.6% 14.1 %              Share-based compensation  463  433     Depreciation and amortization  14,939  14,836     EBITDA, as adjusted $91,366 $92,098   (0.8)%EBITDA margin, as adjusted  16.3% 16.9 %               TopBuild Corp.          Adjusted EBITDA (Unaudited)          (dollars in thousands)                       Three Months Ended March 31,       2025  2024   Change Total net sales          Sales before eliminations $1,305,337  $1,344,537     Intercompany eliminations  (72,059)  (65,820)    Net sales after eliminations $1,233,278  $1,278,717   (3.6)%           Operating profit, as reported - segments $198,675  $234,336     General corporate expense, net  (9,259)  (9,067)    Intercompany eliminations  (11,927)  (10,761)    Operating profit, as reported $177,489  $214,508     Operating margin, as reported  14.4 % 16.8 %              Rationalization charges  15,358   (750)    Acquisition related costs †  1,300   676     Operating profit, as adjusted $194,147  $214,434     Operating margin, as adjusted  15.7 % 16.8 %              Share-based compensation  5,042   5,127     Depreciation and amortization  35,570   34,257     EBITDA, as adjusted $234,759  $253,818   (7.5)%EBITDA margin, as adjusted  19.0 % 19.8 %              Sales change period over period  (45,439)       EBITDA, as adjusted, change period over period  (19,059)       Decremental EBITDA, as adjusted, as a percentage of change in sales  (41.9)%                 † Acquisition related costs include corporate level adjustments as well as segment operating adjustments.            TopBuild Corp. Same Branch and Acquisition Metrics (Unaudited) (dollars in thousands)           Three Months Ended March 31,    2025  2024  Net sales       Same branch:       Installation $730,825  $798,743  Specialty Distribution  541,258   545,794  Eliminations  (72,059)  (65,820) Total same branch $1,200,024  $1,278,717          Acquisitions (a):       Installation $14,708  $—  Specialty Distribution  18,546   —  Total acquisitions $33,254  $—  Total net sales $1,233,278  $1,278,717          EBITDA, as adjusted       Same branch $229,915  $253,818  Acquisitions (a)  4,844   —  Total $234,759  $253,818          EBITDA, as adjusted, as a percentage of sales       Same branch (b)  19.2 %   Acquisitions (c)  14.6 %   Total (d)  19.0 % 19.8 %        As Adjusted Incremental/(Decremental) EBITDA, as a percentage of change in sales       Same branch (e)  (30.4)    Acquisitions (c)  14.6 %   Total (f)  (41.9)%           (a) Represents current year impact of acquisitions in their first twelve months (b) Same branch metric, as adjusted, as a percentage of same branch sales (c) Acquired metric, as adjusted, as a percentage of acquired sales (d) Total EBITDA, as adjusted, as a percentage of total sales (e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales (f) Change in total EBITDA, as adjusted, as a percentage of change in total sales          TopBuild Corp. Same Branch Revenue by Line of Business (Unaudited) (dollars in thousands)              Three Months Ended March 31,      2025 2024 Change Residential:          Same branch (a) $754,824 $834,843  (9.6)%Acquisitions  14,927  —    Total Residential sales  769,751  834,843  (7.8)%           Commercial/Industrial:          Same branch (a) $445,200 $443,874  0.3 %Acquisitions  18,327  —    Total Commercial/Industrial sales  463,527  443,874  4.4 %Total net sales $1,233,278 $1,278,717  (3.6)%           (a) Represents current year impact of acquisitions in their first twelve months TopBuild Corp. Non-GAAP Reconciliations (Unaudited) (in thousands, except share and per common share amounts)           Three Months Ended March 31,    2025  2024  Gross Profit Reconciliation               Net sales $1,233,278  $1,278,717          Gross profit, as reported $351,473  $387,150          Rationalization charges  13,503   —  Gross profit, as adjusted $364,976  $387,150          Gross margin, as reported  28.5 %30.3 %Gross margin, as adjusted  29.6 %30.3 %        Selling, General and Administrative Expense Reconciliation               Selling, general, and administrative expense, as reported $173,984  $172,642          Rationalization charges  1,855   (750) Acquisition related costs  1,300   676  Selling, general, and administrative expense, as adjusted $170,829  $172,716          Operating Profit Reconciliation               Operating profit, as reported $177,489  $214,508          Rationalization charges  15,358   (750) Acquisition related costs  1,300   676  Operating profit, as adjusted $194,147  $214,434          Operating margin, as reported  14.4 %16.8 %Operating margin, as adjusted  15.7 %16.8 %        Income Per Common Share Reconciliation               Income before income taxes, as reported $165,973  $206,995          Rationalization charges  15,358   (750) Acquisition related costs  1,300   676  Income before income taxes, as adjusted  182,631   206,921          Tax rate at 26.0%  (47,484)  (53,799) Income, as adjusted $135,147  $153,122          Income per common share, as adjusted $4.63  $4.81          Weighted average diluted common shares outstanding  29,174,892   31,843,818           TopBuild Corp.Reconciliation of Adjusted EBITDA to Net Income (Unaudited)(in thousands)         Three Months Ended March 31,   2025 2024 Net income, as reported $123,385 $152,381 Adjustments to arrive at EBITDA, as adjusted:      Interest expense and other, net  11,516  7,513 Income tax expense  42,588  54,614 Depreciation and amortization  35,570  34,257 Share-based compensation  5,042  5,127 Rationalization charges  15,358  (750)Acquisition related costs  1,300  676 EBITDA, as adjusted $234,759 $253,818         TopBuild Corp. Acquisition Adjusted Net Sales (Unaudited)(in thousands) 2024 2025 Trailing Twelve Months Ended Q2 Q3 Q4 Q1 March 31, 2025Net sales$1,365,612 $1,373,268 $1,312,206 $1,233,278 $5,284,364Acquisitions proforma adjustment † 22,616  13,363  8,762  —  44,741Net sales, acquisition adjusted$1,388,228 $1,386,631 $1,320,968 $1,233,278 $5,329,105               † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches                           TopBuild Corp. 2025 Estimated Adjusted EBITDA Range (Unaudited) (in millions)        Twelve Months Ending December 31, 2025   Low  High Estimated net income, as reported$508.0 $630.0 Adjustments to arrive at estimated EBITDA, as adjusted:     Interest expense and other, net 54.0  48.0 Income tax expense 179.0  221.0 Depreciation and amortization 147.0  142.0 Share-based compensation 20.0  17.0 Rationalization charges 15.0  15.0 Acquisition related costs 2.0  2.0 Estimated EBITDA, as adjusted$925.0 $1,075.0        This press release was published by a CLEAR® Verified individual.

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